Figure 5.1 Estimated Impact of One Standard Deviation Increase on Volatility While convergence is highly correlated with equity market volatility at statistically significant levels across time, the control variable for failed state status is relatively uncorrelated with equity volatility despite a small positive coefficient. The relationship between the failed states index control variable and volatility was not statistically significant. To ensure that the failed states index and convergence were not capturing the same phenomenon, correlation coefficients were run that showed a modest (below 0.20) relationship between the two variables.